EU agency relocation race starts with 23 cities

EU countries will have to choose between 23 cities to host the two London-based EU agencies, which will have to be relocated after Brexit, in a selection process that started on Tuesday (1 August) and should be completed before the end of the year.

Monday was the last day to apply, and the list was published on Tuesday by the Council of the EU, where representatives of member states meet.

The competition to host the European Banking Authority (EBA) will be composed of eight cities: Brussels, Dublin, Frankfurt, Paris, Prague, Luxembourg-City, Vienna, and Warsaw.

Four of them - Brussels, Dublin, Vienna and Warsaw - are candidates for both agencies, while two countries, France and Germany, present a city for each agency - Lille and Bonn for the EMA, Paris and Frankfurt for the EBA.

Six countries - Cyprus, Estonia, Hungary, Latvia, Lithuania, and Slovenia - have not presented a candidate.

In the first step of the process, the European Commission will give an "objective assessment" of the applications on 30 September.

Criteria include the "accessibility of the location", "adequate education facilities for the children of staff members" and "appropriate access to the labour market, social security and medical care for both children and spouses."

"We're talking about human beings and their future choice of a new city where they will be living," EU commission spokeswoman Mina Andreeva said on Tuesday.

The criteria also specify that the agencies must be able to take up its functions in the new location at the date of Brexit and still be able to "attract highly qualified staff".

The choice will also have to take into account the so-called geographical spread - an effort to have agencies in as many member states as possible. This was introduced in 2003, just before ten new countries joined the EU.

Complex procedure

After the commission hands in its assessment, the selection process will be discussed by EU leaders at their summit in October, and a final decision is expected in November.

EU affairs ministers will first vote to choose the EMA location, before voting on the EBA's new city, using a complex voting system that could end up with Estonia, the current EU presidency, "drawing lots" if there is no winner after three rounds.

Members states, which will almost all have to take a decision while having at least one candidate, said the process that they set up will "be fair and transparent". But there is no guarantee that political horse-trading will not take place behind the scenes.

"I will tell you that the process is fair and transparent when we have won," Luxembourg's EU ambassador, Georges Friden, quipped on Tuesday.

On Monday, Luxembourg was one of the last countries to make its application official. The country aims to host the European Banking Authority (EBA).

The Grand Duchy, whose economy is based on financial services and which already hosts the Court of Justice of the EU, the Court of Auditors, the European Investment Bank and the European Stability Mechanism, says it is "the natural choice" for the EBA.

"It would once again confirm Luxembourg's situation as both a European capital and a financial centre," the ambassador said.

'Critical advantage'

He argued that the EBA "cannot interrupt its functioning for any length of time" and that Luxembourg's "experience of the workings of that type of institutions is of course a critical advantage."

Referring to revelations on tax rulings that helped companies to avoid taxes, he said that Luxembourg "has always been applying relevant EU rules" and that the issue should not be taken into account.

Luxembourg also insists that a building, which could be adapted to the EBA, has already been built, and that it would be rent-free for a period that would have to be negotiated.

Luxembourg's main competitors are Paris, where the European Securities and Markets Authority (Esma) is located, and Frankfurt, which is home to the European Central Bank and the European Insurance and Occupational Pensions Authority (Eiopa).

Earlier this year, the Grand Duchy said that a decision taken by member states in 1965 gave it legal grounds to claim the EBA.

The 1965 decision states that member states are "willing to locate in Luxembourg, or to transfer thereto, other Community bodies and departments, particularly those concerned with finance".

But the ambassador said on Tuesday that, with a selection process now agreed for the relocation of the EBA, "it would not be appropriate to unleash a massive legal debate".